The National Board of Revenue (NBR) will get tough with both residential and commercial building owners who hardly pay tax or barely have any Taxpayers Identification Number (TIN).
Primarily, the revenue authorities have decided to serve notices to about 50,000 errant house owners, particularly from metropolitan cities, asking them to open income tax files and pay tax by April.
If they do not comply with the request, the board may freeze their bank accounts and adjust the taxes from there, officials said.
The notice will be served under article 93 of Income Tax Ordinance, 1984.
Of the 50,000 house owners that are going to face the action in the first phase, 30,000 are residential building owners and the remaining 20,000 are commercial building owners.
NBR officials said the number may exceed once the process starts and the board is expecting to bag Tk1,000 crore tax alone from the sector.
The decision came as only a small number of landlords were found to have complied with the existing legal rules although it was mandatory for them since July 1, 2014.
According to the law, any persons having ownership of any property used for commercial or residential purposes must collect their monthly rent over Tk25,000 through bank accounts in any scheduled banks.
The NBR rule was made applicable for both residential and commercial structures. Individuals, companies and joint owners will be considered landlords, according to the rule.
The revenue authority will impose penalty on the house owners at the rate of 50% of taxes payable on incomes derived from the house property or Tk5,000, whichever is higher, for not transacting the house rent through banks.
According to a survey conducted in 2014, the tax authority found 1.66 lakh landlords are out of tax net despite having a huge income. Among the tax evading house owners, about 70% were businessmen, 25% just owners and 5% shop owners.
The government has made mandatory payment system of the house rents through banking channel to ensure transparency in the house rent collection and to bring more people under tax net while prohibiting the practice of dodging tax on earnings from rental property.
NBR officials said about a half of the total house owners in metropolitan cities skips payment of income tax by showing less income in their income tax returns.
Currently, the revenue body does not have any list of house owners having tax-related information.
The NBR will seek support from government organisations including City Corporations and Dhaka Electric Supply Company Limited and from Real Estate and Housing Association of Bangladesh (REHAB) to continue the process.